When it comes to car insurance, there are a lot of things that drivers don’t know – and they could be costing them big time. Almost half of all drivers don’t shop around for car insurance quotes each year, and as a result, they overpay by an average of $368 annually. That may not seem like a lot, but throughout a lifetime it can add up to thousands of dollars in unnecessary costs.
So, what are some of the biggest things that drivers don’t know about car insurance? Read on to find out.
You May Not Need as Much
Most states have minimum insurance requirements, and many drivers assume that they need to purchase a policy that meets or exceeds those requirements. However, that’s not always the case. If you have an older car that isn’t worth much, you may be able to get by with just the minimum coverage. Of course, you’ll want to check with your state to see what the requirements are and make sure you understand them before making any decisions.
Additionally, if you have a good driving record and a history of responsible financial habits, you may be able to get by with less coverage than someone who has had accidents or DUI convictions. Insurance companies often offer discounts to drivers who they perceive to be low risk, so it’s worth checking to see if you qualify for any of those discounts.
Driver’s Permit and Car Insurance
In most states, you can’t get a driver’s permit until you have car insurance because permits are only issued to drivers who can show proof of financial responsibility in the event of an accident. So, if you’re a teenager who is looking to get your permit, you’ll need to have a parent or guardian add you to their car insurance policy first.
However, having a driver’s permit doesn’t automatically mean that you’re covered by your parents’ car insurance. In most cases, coverage only extends to drivers who are listed on the policy as owning a car. So, if you want to be sure that you’re covered, you should check with your parent’s insurance company to see if you need to be listed on the policy.
Your Credit Score Matters
Most people know that their credit score can affect their ability to get a loan or a credit card, but did you know that it can also impact your car insurance rates? Insurance companies use credit scores to help determine rates because people with lower scores are more likely to file claims. So, if you have a good credit score, you may be able to get a discount on your car insurance.
On the other hand, if you have a poor credit score, you could be facing higher rates. In some states, drivers with bad credit can be charged up to twice as much for car insurance as drivers with good credit.
You Might Need Specialised Coverage
If you use your car for business purposes, you may need to purchase a commercial auto insurance policy instead of a personal one. Most personal auto insurance policies exclude coverage for business use, so if you have an accident while you’re working, you could be on the hook for the damages.
Additionally, if you drive a high-end car, you may need to purchase specialised coverage to protect it. Some luxury cars are not fully covered by standard auto insurance policies, so if you want to be sure that your car is properly protected, you may need to purchase additional coverage.
Your Car Insurance May Not Cover Rentals
If you rent a car while you’re on vacation, don’t assume that your car insurance will cover it. Most personal auto insurance policies exclude coverage for rental cars, so you’ll need to purchase a separate policy or get coverage from the rental company.
Additionally, if you have an accident in a rental car, your auto insurance policy may not cover the damages. So, if you plan to rent a car, be sure to check with your insurance company to see what your coverage includes.
Now that you know a little bit more about car insurance, you can make better decisions when it comes time to purchase a policy. Be sure to check with your state to see what the requirements are, and then talk to an insurance agent to find out what type of coverage is best for you. Keep in mind that your credit score may impact your rates, and if you use your car for business purposes, you may need specialised coverage.
Most importantly, remember that not all policies are created equal – so be sure to do your research before buying!
Auto insurance is a fundamental aspect of responsible car ownership, providing protection and peace of mind. By understanding the types of coverage available, your state’s requirements, and implementing cost-saving strategies, you can ensure you have the right coverage at the best possible price. Remember to regularly review and update your policy to accommodate changes in your life and driving habits. With these tips in mind, you can navigate the world of auto insurance with confidence and make informed decisions that protect both your vehicle and your wallet.